Is American Century Equity Income Investor (TWEIX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Large Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is American Century Equity Income Investor (TWEIX). TWEIX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
TWEIX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds'high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.
History of Fund/Manager
TWEIX finds itself in the American Century family, based out of Kansas City, MO. The American Century Equity Income Investor made its debut in August of 1994 and TWEIX has managed to accumulate roughly $4.68 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 9.03%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 8.86%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 9.68%, the standard deviation of TWEIX over the past three years is 9.29%. Over the past 5 years, the standard deviation of the fund is 8.8% compared to the category average of 9.84%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In TWEIX's case, the fund lost 34.35% in the most recent bear market and outperformed its peer group by 16%. This makes the fund a possibly better choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 0.69, the fund is likely to be less volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a positive alpha of 1.65, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, TWEIX is a no load fund. It has an expense ratio of 0.91% compared to the category average of 0.99%. From a cost perspective, TWEIX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $50.
Bottom Line
Overall, American Century Equity Income Investor ( TWEIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, American Century Equity Income Investor ( TWEIX ) looks like a good potential choice for investors right now.
Your research on the Large Cap Value segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (TWEIX): Fund Analysis Report
To read this article on Zacks.com click here.
